I applaud President Obama for his stimulus package and the practical things he is doing to help people who are suffering — the unemployed and the homeless.  There are plenty of things I would have done differently, including not bailing out any banks.  Yet, I am glad that after spending literally $TRILLIONS propping up the Wall Street crowd that a little money will be spent helping people stay in homes. All of these efforts are going to help but they are only the tip of a very big iceberg.

The American economy is still going to suffer greatly for a long time to come.  The reason is simple — jobs and wages.   People cannot exist in America without jobs and living wages.  In fact, this is what makes this current crisis so much worse than any previous downturn.  There have been plenty of downturns when people lost jobs.  Yet, in the past once the economy recovered people were able to find jobs again so that they could support themselves.  But things are really different this time.

This time there is long term destruction of jobs because of technology and outsourcing.  Most of these jobs will never come back.  For example, let say that somebody wanted to start a business today.  With very few exceptions, a business would be able to utilize technology and outsourcing to reduce costs and would only employ a fraction of the people required in the past.  This is extremely significant for the long term of America, because people who are losing jobs in this downturn will never get those jobs back.

At some point the ‘unemployment rate’ will decline because of the way it is calculated — just ignore it because it is a fraud.  Once people stop collecting benefits they are considered employed — doesn’t matter if they are or not.  Instead, follow the total number of employed to discover that people are not getting jobs.  Plus, don’t forget that America needs to create about 125,000 jobs a month just to stay even with increases in population.  Think about that in terms of the nearly 5 million jobs losses since this downturn began.

Likewise, wages are a big problem.  For America to function it has to have a large middle class with plenty of disposable income.  The disposable income can be used to buy things that will employ others.  Reduce wages, reduces demand which results in more unemployment.  More unemployment reduces wages because employers can pay workers less.  This is a vicious and destructive cycle and the only thing that can stop it is government.

Why do you think that conservatives want their fake ‘free trade’ agreements?  These companies want to pay workers less and maintain demand.  Thus, they export their way to demand.   American workers lose — and lose big.  Plus, America hasn’t done such a good job at exporting goods and services to other countries.  Instead, countries like China have flooded America with goods that can be produced at a small fraction of what it would cost in America.  This is why WalMart sells all this stuff from China.  Americans are consuming Chinese goods because their wages are low.

In the last decades and particularly since 2000, American business has been a sham.  That is, these businesses have been making their profits on ‘financial transactions’ and not from their business.  This is the reason there have been so many mergers and acquisitions and phony financial products like derivatives.  This is the reason that all sorts of companies got involved in mortgages — it was a quick way to boost their profits — or at least they thought so.  Why else would General Motors buy Ditech whose business is mortgages?  GM was suppose to be in the business of making cars — instead, most of their recent profits came from banking.    Also, businesses continued to reduced wages on Americans and even outsourced jobs overseas which reduce wages to Americans to zero.

This financial crisis is going to get much worse.  It doesn’t matter if Wall Street has the occasional rally.  Remember, Wall Street still has the same greed and corruption that caused this financial crisis running everything.  They will figure out another idea or sham to inflate prices of some companies.  They will inflate until they create another bubble and it pukes on ordinary Americans.  Maybe they will need another bailout of the ‘too big to fail’ nonsense.  Why not ‘too big to bailout’ instead?

The only long term solution to the problem in America is a capitalistic version of socialism.  Specifically, any company that produces essential services (e.g. utilities, health care, news organizations, transportation) must be converted into a non-profit entity. These are companies that are required for the public good.  There can be no shareholders in these companies other than American taxpayers.   There must be new laws that require all workers be paid a ‘living wage’ — forget minimum wages which are less than half of a ‘living wage’.    In addition, if unemployment persists then  the government needs to limit the number of hours a person can work a week to something less than 40 hours.  This needs to be reduced until there are enough jobs for everybody.

Education is important and it also needs to be targeted.  The government needs to create incentives so that young people are pursuing education that will help the country.  Sure, let people study whatever they want but give incentives to steer them in the right direction.

One good thing is that there is plenty of work that needs to be done in America — just look around!  The problem is that private companies are not interested in developing businesses to perform this work because there just isn’t any profit potential in much of it.  If there was there wouldn’t be 50 million people without health insurance.  There wouldn’t be poor infrastructure throughout the country.  There would be a thriving green economy.  These are not businesses that American capitalists wants to invest in.  Capitalism will always do the easy thing and for a long time it has been to hire lobbyists to manipulate the system and to create sham businesses like sub prime mortgages and derivatives.

After nationalizing all business that provides for basis necessities, there will be plenty of other things where entrepreneurs can apply their greed motive.  In the process they will create some jobs.

If America continues with the same paradigm that has gotten us into this crisis, this crisis is going to last for decades.  It will result in civil unrest.  Unfortunately, this is what will likely happen.

America is doomed.